Subway found success with its $5 footlong sandwich campaign. Fiverr probably wouldn’t have become known if it hadn’t had the $5 pricing policy. Apple gets it. The new iPad costs $499. Old one $399. Simple pricing works.

Tiered pricing is the standard for SaaS companies, and many follow suit blindly. But maybe you should get rid of it? Assistly (now desk.com) did just that.

“Today’s businesses want to buy SaaS services like they buy apps in the Apps Store. We saw an opportunity to simplify our pricing and drive customer satisfaction through the roof.”

- Matt Trifiro, senior vice president of marketing

My point is not that you should get rid of tiered pricing, but that you should strive for simplicity – even if it means disrupting the norm.

2. Make it easy to compare

People do research, and compare your offer to a couple of alternatives. You want to come out as a winner from these comparisons.

Let’s say I’m looking for a social media monitoring service.

“I’m an educated buyer, I know what my needs are, so I’m not going to read through the websites, I’m just going to quickly look at the pricing of different options out there.” This is how most users compare options. They will only pay extended amount of attention when the first conditions have been met.

Plans have another role to play besides getting people to sign up. They’re also there to help people understand what they want. As Dan Ariely put it – “most people don’t know what they want unless they see it in context.” The options on different plans should communicate what’s possible.

Trackur is doing many things well, and some things not so much. The prices are huge – so they get more focus than the features / benefits. If you’re not competing on price, might not be a good idea.

What I like is the how the features are presented – well built for the browsers doing comparison shopping (and +1 for the tooltips).

On the negative side, the feature list is kind of long and doesn’t even fit on the same screen with prices. It’s a tough challenge for the designers, I know. They’ve still done much better than some horrible examples.

Oh, and lose the exclamation marks.

Some companies make it hard to compare on purpose

Of course, you could try a radically different approach and make it very difficult to compare. Supermarkets and airlines do just that – on purpose. The cost of flying from point A to point B is not that straightforward.

“For most travelers, the air fare is now the starting point rather than the end point in calculating what your trip cost will be,” said Henry Harteveldt, an analyst at Forrester Research. “You can’t rely on average air fare data anymore.”

There’s the price of the seat, then fees for checked luggage (often different for 1st and 2nd), sometimes even for carry-on bags, food and so on.

Why do they do this? Nickel-and-diming you is one, but also so you wouldn’t be (easily) able to compare their offer to the competition, and decide on the price.

A common way to confuse people is to see in bulk. We know more or less how much a carton of eggs should cost. What about a bulk offer of 48 eggs? People assume that buying in bulk is cheaper, but often it’s actually more expensive.

While it may work for some companies, I advise against it. As simple as possible pricing will work the best for 9 out of 10 companies.

3. Help people choose a plan

When you offer a choice of plans, people need to make a choice. The easier it is to understand the differences between plans, the easier it is to choose.

What they’re doing a lousy job with is communicating the features of each plan.

Their competitor Vzaar is using meaningless names for their plans, which is unfortunately pretty common. Professional? As in “not amateur”? Blaah.

What Vzaar is doing well is emphasizing one of the plans. It draws the eye and suggests a “safe” option. When in doubt, the user can pick that one.

Which plan to emphasize?

There is no single best way to go about it. I would test these options:

The middle option. It makes sense to suggest the middle plan as most people usually prefer something in the middle anyway.

What fits most users the best. From user experience perspective you should suggest the plan that (honestly) fits the majority of the visitors the best. Hopefully you’ve planned your plans well.

The most expensive one. Price anchoring! Let’s say your most expensive option is $990/mo. If you emphasize this plan, that’s the first price they will see. Next – they see the middle plan is just $59/mo. Suddenly it looks cheap.

Free / Trial. Suggest the plan with the least amount of friction. Get them to sign up and see for themselves that your product is wicked (and it’s worth it to upgrade).

4. Address FUDs

FUDs – fears, uncertainties, doubts. Whenever you ask for money, there is friction. You cannot remove friction, but you can minimize it.

The best way to overcome objections is to prevent them from happening. First, make a list of all the possible reasons why somebody might NOT want to buy your thing (better yet, survey your leads and customers). Identify which FUDs are most common. Second, write an answer to all those fears and doubts.

The result might be something like this:

What if it’s not what I’m looking for? -> We offer a full 30-day no questions asked money back guarantee. If you don’t like it, you get all your money back.

I don’t think it will work in my case. -> Show or link to testimonials / case studies where people like X have used it successfully.

… and so on. Now work with your designer to find a place on your pricing page to include this.

See how Kajabi is doing it. Notice the guarantee, testimonials and FAQ section right below the pricing plans:

Trust and security

Will my credit card data be safe? Am I the only idiot buying this stupid thing?

These might be sub-conscious questions, but they’re there for a lot of people – so address it.

Sprout Social shows customer logos for social proof (and some testimonials):

5. Offer currency options

It’s a global world. If you offer your product in euros, pounds or Canadian dollars to Americans, this will cause some friction. And probably US dollars are difficult for some Europeans.

I don’t have exact data on how many people are negatively affected by seeing prices in foreign currencies, but reading this thread on HackerNews (predominantly US audience) gives some idea:

Would you buy a service that bills only in €?

€ is OK – 70 votes

€ is OK but I would really prefer $ if possible – 65 votes

€ is not OK at all – 19 votes

I would not buy in $, but only in € – 5 votes

So out of a total of 159 votes 84 (~52.8%) would want to pay in dollars instead of euros. Foreign currency is definitely causing some friction. What’s the today’s rate? Do I need to use a calculator? Does my bank take a cut? Since exchange rates change, and how much will I get billed each month?

People want to know how much they’re really paying!

The solution: give the option to see the prices in different currencies.

Basekit is a UK company. They show their prices both in pounds and dollars. Notice the currency change icons.

6. Limit choice

Too much choice paralyzes.

Most popular number of pricing plans offered among SaaS companies seems to be 4. While the linked article says it must be the wisdom of the crowds, I bet most of those companies just decided on 4 plans on a whim, and never tested it.

RingCentral had 4 plans on their pricing page, and they decided to test it. The page that showed three plans increased conversions from the control (4 plans) by more than 37%. The page that showed two plans decreased conversions.

However, when you go to RinCentral pricing page today, it has 4 plans again (couldn’t find a case study to explain why). They must have conducted new tests and found a new winning page. Do your own testing.

You might have heard that choices should always be limited to 7 +/-2. It’s a myth.

Talk about engagement! How many other pricing pages do you know where people hang out for 15 minutes?

We did something similar for Traindom. People can drag the slider to see their hypothetical monthly payment.

People absolutely love it, and almost every visitor spends some time toying with it. The problem we had is that the numbers we showed were too confusing for some, and live chat was bombarded with clarifying questions. Simplify!

(And use live chat for instant feedback).

9. Clear call to action

The call to action button design, size and wording matter.

The best starting point is to make the CTA buttons big and avoid saying ‘buy now’. I yet have to see a test where ‘buy now’ performed better than the alternatives (‘add to cart’, ‘get started’, ‘choose plan’ etc).

Once you have the fundamentals in place, you can test colors and other minor things.

1o. Tell them what happens next

People like to feel in control. That’s why the elevators include the “close doors” button. (It doesn’t actually do anything).

On the pricing page, they want to know what happens next. Make it clear what are the next steps, what’s going to happen after they pay. Put them in control of over the process. You’re dealing with their hard-earned money, nobody likes surprises in this phase.

Awe.sm is getting it right by showing a liner flow of steps above the plans:

What about having the sign-up form on the pricing page?

It’s something you have to test, but usually from the user experience point of view you shouldn’t include anything on the page the user doesn’t expect. Remember, people spend most of their time on OTHER websites. Most pricing pages don’t have a form right there, so people are used to expecting a call to action.

Seeing a sign-up form right there might seem like a sales pressure, a distraction. It will take away the focus from choosing the right plan (and will cause some people to flee).

Do your own testing

Don’t just copy and assume stuff. Interview your customers. Try to understand how they shop for the things you sell. Simplify.

Peep Laja

Peep Laja is an entrepreneur and conversion optimization expert. He's been doing digital marketing for 10+ years in Europe, Middle East, Central America and the US. He has extensive experience across verticals: in the past he’s run a software company in Europe, an SEO agency in Panama, real estate portal in Dubai and worked for an international non-profit.
Today he runs a conversion optimization agency Markitekt.

10 Comments

There is a huge mistake that most pricing structures make… not enough of a choice.
I’m going to use Dropbox as the example here. If you look at their pricing structure, they have Free 2GB, then shoots all the way up to 100GB starting at $10 a month.
Well, I need more than 2GB, but don’t need anywhere near 100GB. Let me have the option to choose exactly how much space I need on a per GB price basis. 15GB at $2.50 per month would do fine for me, but I can’t get it. Therefore, I’m sticking with the free option and then signing up for Box.com’s free option and Sugarsync’s free option as well. Dropbox lost a sale.

@Tim: I think Dropbox know’s what they are doing… but you make a good point.

@Peep, I think a few of these pages have changed :) Love that you have the old ones ;) Maybe it’s time to compare the old to the new?

marcoJan 26, 2014 @ 15:54:40

Great post , very helpful!

One thing I haven’t seen anywhere talking about is RESPONSIVE tables.

Nowadays almost more than 50% is mobile traffic. When you view these tables on your mobile devices, it will be viewed one below the other and will not make any sense anymore most of the time. What is your opinion about this? What would be the best comparison layout for mobile devices?